Novated Lease Calculator Australia | How much will you save?

How are novated lease costs calculated?

The best way to calculate your novated lease costs is to get a personalised quote that takes account of the specific car you want, your income and other factors that will impact the lease cost. An online novated lease calculator will give you an idea of the costs, but it it will be based on some general assumptions that might no apply to you.

Below are the factors that will impact the novated lease calculation and your costs.

The cost of the car you’re buying

The cost of your novated lease will be directly related to the cost of the vehicle. Even if you haven’t found the vehicle you want yet, having a rough idea of cost will help you get a closer estimate. Something to be careful of is getting an estimate based on the base model of the vehicle as a default. If you end up choosing an upgraded model or adding accessories, your actual costs could be significantly higher. The cost of the car also determines what impact (if any) fringe benefits tax has on your novated lease.

Your salary

Because novated lease costs come from your salary, the tax savings will vary based on the driver’s salary. This comes down to your marginal tax rate. The higher that is, the higher your tax savings will be. That said, drivers in lower tax brackets will still save tax, and your salary won’t have a major impact on how much the lease actually costs.

EV vs Non-EV

This will affect the calculation in a couple of ways. Eligible EVs and PHEVs are exempt from fringe benefits tax, completely changing the calculator and drastically reducing the cost of the lease.

EV running costs are different (lower) than petrol and diesel cars so that needs to be accounted for.

Your car usage

The calculation will change depending on how much you drive your car per year. If you drive a lot, a greater allowance will be made for running costs.

Business vs personal use

This one also comes down to fringe benefits tax. A higher portion of business use reduces the impact of FBT. Unless of course it’s an EV in which case all use of the car is exempt from FBT.

The lease term

The novated lease term is important as it determines what the vehicle’s residual value will be at the end of the lease, plus what the regular payments will be. A longer term means a lower residual and lower regular repayments, but generally speaking the per year income tax savings will lower. The lease term will also impact the calculation as you might need to budget for an extra set of new tyres during the lease.

Location in Australia

This affects vehicle delivery costs, state stamp duty and other government costs.

Example novated lease calculation

To give you an idea of how a novated lease cost calculation could end up looking here is an example, based on the following assumptions:

Customer is buying a 2023 Tesla Model Y (RWD)
Annual gross salary is $120,000
Running cost budget based on 15,000kms driven annually
Driver is based in NSW
Running costs included: comprehensive car insurance, registration & CTP, charging, tyres, servicing, lease admin fee.

Item	Value
Vehicle price	$68,301
GST saving on vehicle	-$6,109
Weekly cost of lease	$222
Value of car running costs included in weekly cost	$75
Weekly income tax saving	$117
Weekly GST saving	$34
Residual value of vehicle	$19,245
Total cost of paying for car & running costs over 5 years (including residual)	$77,009
Annual take home pay with lease	$76,519
Annual take home pay without lease	$88,072
Total tax savings with lease over 5 years	$39,239

What will your novated lease cost estimate show? (Terms explained)

Regular lease payment amount: This is simply the cost of the lease to you every week, fortnight, or month (whatever your pay frequency is). This is how much your take home pay will be reduced by during the lease term.
Regular income tax saving: How much less income tax you’ll pay each pay cycle.
Regular GST saving: This reflects the GST saving your make on your regular lease costs (like fuel, car insurance, servicing etc.)
Total tax saving: This combines the income tax and GST savings and may be shown as an annual amount or a total over the life of the lease.
Breakdown of lease cost: This will show how much you’re paying regularly to cover the lease payment itself (including interest), plus maintenance, tyres, electricity/fuel, car insurance, registration and CTP cover, and lease admin fees.
Taxable value of vehicles: This is the value of the car for the purpose of applying fringe benefits tax to the lease.
Pre-tax deduction amount: This is the portion of your regular lease payment which is taken from your pre-tax salary.
Post-tax deduction (employee contribution method): If your novated lease is subject to fringe benefits tax, part of your lease deduction will be made using a contribution from your salary after tax has been deducted. This cancels out the FBT.
Income comparison: Your novated lease calculation should also show your taxable income, the amount of income tax paid, plus your take home pay with and without the novated lease.